By Michele Pek
SINGAPORE (Reuters) -Iron ore futures prices declined on Thursday as trade concerns and reports of steel production cuts outweighed additional stimulus measures to boost consumption in China.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) closed down 0.45% at 773 yuan ($106.78) a metric ton.
The benchmark April iron ore on the Singapore Exchange edged 0.49% higher to $100.25 a ton as of 0708 GMT.
“A trade war would be a challenge for the market, as a loss of export-driven demand in China could hurt iron ore demand,” said ANZ analysts.
China unlocked more fiscal stimulus on Wednesday, promising greater efforts to support consumption and cushion the impact of an escalating trade war with the United States.
Washington has so far added an extra 20% on existing tariffs for Chinese goods, with the latest 10% increment enforced on Tuesday, drawing Beijing’s retaliation.
Still, Beijing’s renewed emphasis on consumption is not being matched by policy firepower, with the immediate steps to boost household demand underwhelming some economists.
Meanwhile, in March, the average daily molten iron output is expected to increase to about 2.329 million tons, broker Hexun Futures said, adding that demand for the steelmaking material has recovered in China.
Still, news of steel production cuts intensified the downward pressure on prices, Hexun said.
China will restructure its giant steel industry through output cuts, although it did not announce any target in its most recent intervention to address overcapacity in the sector.
Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 0.42% and 0.58%, respectively.
Other steel benchmarks on the Shanghai Futures Exchange climbed. Rebar gained about 0.4%, hot-rolled coil edged 0.35% higher, stainless steel was up 1.28%, while wire rod ticked up 0.09%.
($1 = 7.2390 Chinese yuan)
(Reporting by Michele Pek; Editing by Sherry Jacob-Phillips and Eileen Soreng)
